Wall Street watches a company’s quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
2 Stocks to Add to Your Watchlist
The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate. The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction.
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to look at a qualifying stock. Nvidia (NVDA) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $1.33 a share zero days away from its upcoming earnings release on May 25, 2022.
NVDA has an Earnings ESP figure of 2.57%, which, as explained above, is calculated by taking the percentage difference between the $1.33 Most Accurate Estimate and the Zacks Consensus Estimate of $1.30.
NVDA is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Dell Technologies (DELL).
Dell Technologies, which is readying to report earnings on May 26, 2022, sits at a Zacks Rank #3 (Hold) right now. It’s Most Accurate Estimate is currently $1.44 a share, and DELL is one day out from its next earnings report.
Dell Technologies’ Earnings ESP figure currently stands at 4.35% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.38.
NVDA and DELL’s positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
Find Stocks to Buy or Sell Before They’re Reported
Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they’re reported for profitable earnings season trading. Check it out here >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Dell Technologies Inc. (DELL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research